Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2012

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Principles of Consolidation — The consolidated financial statements include the accounts of Bio-Path Holdings, Inc., and its wholly-owned subsidiary Bio-Path, Inc. All intercompany accounts and transactions have been eliminated in consolidation.

Related Party — Based on its stock ownership in the Company, MD Anderson Cancer Center meets the criteria to be deemed a related party of Bio-Path Holdings. For the years ending December 31, 2012 and 2011, MD Anderson related party research and development expense was $463,870 and $544,000, respectively. MD Anderson related party research and development expense for the year ending December 31, 2012 included clinical trial expense of $37,700, license maintenance fees of $50,000 and $31,170 in siRNA patent expenses not capitalized in the technology license other asset, and $345,000 in non-cash technology impairment expense related to the Company’s siRNA license (see Note 1.). As of December 31, 2012, the Company had accounts payable related party of $8,582, $100,000 in accrued license payments payable due to the related party for the annual maintenance fee and past patent expenses for the Company’s Technology License, and $26,000 in accrued R&D related expense for the clinical trial. See Notes 5, 6 and 7.As of December 31, 2011, the Company had $544,000 in R&D related party expense for the clinical trial, license maintenance fee and technology impairment, accrued license payments payable related party of $39,538 for patent expenses, and $41,000 accrued expense related party for clinical trial hospital expenses.

Cash and Cash Equivalents — The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

Concentration of Credit Risk — Financial instruments that potentially subject the Company to a significant concentration of credit risk consist of cash. The Company maintains its cash balances with one major commercial bank, JPMorgan Chase Bank. The balances are insured by the Federal Deposit Insurance Corporation up to $250,000. As a result, as of December 31, 2012, $284,046 of the Company’s cash balances was not covered by the FDIC. As of December 31, 2011 the Company had $952,252 in cash on-hand, of which $702,252 was not covered by Federal Deposit Insurance Corporation insurance.

Intangible Assets/Impairment of Long-Lived Assets — As of December 31, 2012, Other Assets totals $1,572,143 for the Company’s technology license, comprised of $2,500,374 in value acquiring the Company’s technology license and its intellectual property, less accumulated amortization of $928,231. The technology value consists of $836,207 in cash paid or accrued to be paid to MD Anderson, plus 3,138,889 shares of common stock granted to MD Anderson valued at $2,354,167 less $690,000 for impairment expense taken in December of 2011 and June of 2012 (see Note 1). This value is being amortized over a fifteen year (15 year) period from November 7, 2007, the date that the technology license became effective. The Company accounts for the impairment and disposition of its long-lived assets in accordance with generally accepted accounting principles (GAAP). Long-lived assets are reviewed for events of changes in circumstances which indicate that their carrying value may not be recoverable. The Company estimates that approximately $160,000 will be amortized per year for each future year for the current value of the technology licenses acquired until approximately 2022. As of December 31, 2011 Other Assets totaled $2,077,414 comprised of $2,868,877 in value acquiring the Company’s technology licenses and its intellectual property, less accumulated amortization of $791,463.

Research and Development Costs — Costs and expenses that can be clearly identified as research and development are charged to expense as incurred in accordance with GAAP. Advance payments, including nonrefundable amounts, for goods or services that will be used or rendered for future R&D activities are deferred and capitalized. Such amounts will be recognized as an expense as the related goods are delivered or the related services are performed. If the goods will not be delivered, or services will not be rendered, then the capitalized advance payment is charged to expense. For the year 2012, the Company had $1,132,712 of costs classified as research and development expense and $463,870 of related party research and development expense. Of the research and development expense totaling $1,132,712, $185,271 was for amortization of the technology license, $53,645 was for stock options expense for individuals involved in research and development activities, $594,440 for drug product material expensed, 124,685 for clinical trial expense and the balance of approximately $174,671 was for drug product testing, advisory services and other R&D activities. Of the $463,870 related party research and development expense, $37,700 was comprised of costs for clinical trial hospital costs, $50,000 for technology license maintenance fees and $31,170 in siRNA patent costs not capitalized in technology license-Other Assets and $345,000 in technology license impairment expense (See Note 2. Related Party). For the year 2011, the Company had $596,802 of costs classified as research and development expense and $544,000 of related party research and development expense.

Stock-Based Compensation — The Company has accounted for stock-based compensation under the provisions of GAAP.  The provisions require us to record an expense associated with the fair value of stock-based compensation.  We currently use the Black-Scholes option valuation model to calculate stock based compensation at the date of grant.  Option pricing models require the input of highly subjective assumptions, including the expected price volatility.  Changes in these assumptions can materially affect the fair value estimate.

Net Loss Per Share – In accordance with GAAP and SEC Staff Accounting Bulletin (“SAB”) No. 98, basic net loss per common share is computed by dividing net loss for the period by the weighted average number of common shares outstanding during the period. Although there were warrants and stock options outstanding during 2012 and 2011, no potential common shares shall be included in the computation of any diluted per-share amount when a loss from continuing operations exists. Consequently, diluted net loss per share as presented in the financial statements is equal to basic net loss per share for the years 2012 and 2011. The calculation of Basic and Diluted earnings per share for 2012 did not include 3,296,354 shares and 85,620 shares issuable pursuant to the exercise of vested common stock options and vested warrants, respectively, as of December 31, 2012 as the effect would be anti-dilutive. The calculation of Basic and Diluted earnings per share for 2011 did not include 3,131,043 shares and 1,437,049 shares issuable pursuant to the exercise of vested common stock and vested warrants, respectively, as of December 31, 2011 as the effect would be anti-dilutive.

Comprehensive Income — Comprehensive income (loss) is defined as all changes in a company’s net assets, except changes resulting from transactions with shareholders. At December 31, 2012 and 2011, the Company has no reportable differences between net loss and comprehensive loss.

Use of Estimates — The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the Company’s consolidated financial statements and accompanying notes. On an ongoing basis, the Company evaluates its estimates and judgments, which are based on historical and anticipated results and trends and on various other assumptions that the Company believes to be reasonable under the circumstances. By their nature, estimates are subject to an inherent degree of uncertainty and, as such, actual results may differ from the Company’s estimates.

Income Taxes — Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.

New Accounting Pronouncements — From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date.  If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption.